Customer Experience Optimization: Technology + Metrics + Culture

delightful_resultsWhile the Industrial Revolution ushered in the era of the celebration of product, the Digital Revolution now celebrates the consumer.

Because today’s consumers initiate and control the conversation, the sooner marketers shift from a product to a customer experience focus, the sooner they will reap the benefits of adapting properly to the changing marketplace.

More than ever, today’s marketers are increasingly interested in building optimal customer experiences that drive long-term profitable relationships than they are in driving revenue from widget sales. As they should be. In the age of the empowered consumer, marketing optimization is quickly becoming a function of managing the customer experience.

Shifting from product to customer experience marketing indeed seems a daunting task for enterprises with multiple lines of business operating across multiple channels. Exactly how is it done? Where do we begin?

Optimization is an ongoing, iterative discipline that is part technology and part process. It’s important to consider investments in each when making the move to customer experience optimization. Although technologies for optimization are easy to spot, processes are less so. The difference between formalized business processes that remain focused on product marketing and those trained on optimizing the customer experience is evident in two key areas: metrics and culture.

So where should you begin? By making investments in all three—technology, metrics and culture—in order to make the switch from product-centric marketing to customer experience optimization.

Technology
There are many forms of marketing optimization technology, including those that focus on multivariate testing, or controlled experimental design and rules management. The term “optimization software”, however, spans a number of applications from web analytics to behavioral targeting to paid search bidding tools.

The market for marketing optimization technology is emerging, fraught with change, overlap, widely differing approaches and sometimes contradiction. Keeping your eye on the fundamental objective of optimization—to ‘make as effective, perfect, or useful as possible’—is a good way to ensure that your optimization technology investments are sound.

Just keep in mind that s focus on controlled testing should provide the backbone for any marketing optimization approach no matter what the technology investments—or constraints.

Metrics
What you choose to measure is as important as measurement itself. Marketers often take great pains to vet investments in measurement technologies and processes, scrutinizing features and methodologies to ensure that their new metrics capability is top notch. Often, however, the plan for exactly what they will measure is less thoroughly drawn.

How well your business generates and maintains long-term profitable customer relationships depends both on how well you manage each customer interaction as well as the entire experience across media and channels. Both the granular detail and the bird’s eye view matter. Your recent ad campaign might have generated huge lift in site traffic and conversion, but upon further inspection seems to have delivered rather undesirable customers. Order values are down and a high return rate has put a strain on customer service. Your successful ad campaign has in fact reduced profitability, but if you only measure ad clicks, you don’t even see it.

Customer experience optimization means implementing a metrics framework that measures your campaigns and programs by their ability to drive broader business outcomes than just clicks. It requires cooperation from many different functional groups, like IT, operations, and marketing and should include a plan for building communication and understanding between these groups. Because they typically start out with different needs and goals, disparate measurement priorities and data requirements, varying measurement infrastructure and methodologies, a proactive, considered plan for how to consolidate your metrics framework so that it still delivers value to each key stakeholder is critical.

Culture
“Optimization is part process, part technology.” “Customer-centricity is a journey not a destination.” “There is no optimization silver bullet.” Common—and quite true—refrains in the marketing optimization marketplace. Each of these statements infers that there is something else going on in the practice of optimization that can’t be addressed with black box solutions.

One of the biggest obstacles marketers face as they endeavor to optimize the full customer experience is organizational culture. Although marketers talk an awful lot about delivering great customer experiences, 75% report they have no single person named responsible for the entire customer experience from end-to-end. Silos exist.

Especially now that customer experiences are woven across multiple media and channels, multiple functional teams are usually involved in making them happen. Without a strong conductor on the bandstand, these teams don’t necessarily operate in concert. The ability shift from a product to a customer focus in your marketing efforts can be much more of a management problem than a technology problem.

Remember that you don’t use paid search advertising to sell widgets, you use it to attract the right types of customers who happen to be online at the moment. Shifting your focus away from the product and even away from the channel itself are key first steps in championing the move toward customer experience optimization in your organization.

And Speaking of Publishing …

imgresCouldn’t agree more with Seth Godin’s latest blog about the future of publishing both online and off. Although we will miss the morning town paper if it goes away entirely, Godin correctly calls our attention to the point that what we’ll really miss is quite a small percentage of it. 98% of the information traditionally packaged by the city paper is better served online anyway—stock quotes, weather, entertainment reviews. And with less felled trees.

Not sure Site entirely agrees with Godin’s statement that “we don’t use this to support that online. Things support themselves.” To our eye, purveyors of good content are still too timid to ask to be paid for it outright, but we’re optimistic that we’ll see a few breakthrough publishers this year that stop wrapping “free content” up in advertising noise and start asking their audience to pay for what they value.

Sustainable Publishing Online – It’s a Good Thing

internet_tacosSurprisingly courageous remarks from Jonah Bloom at Ad Age about where the publisher-advertiser-consumer relationship is going in 2009. Noting that online publishing has outgrown the amount of online advertising that might support it, Bloom thinks publishers need to find new revenue models if they expect to survive. Site has been wondering about publishers relying too much upon ad revenue for a while now and is interested to see if Bloom’s predictions for the coming year pan out. As online marketers, we’d love to see endlessly expanding ad budgets. But as online business people, we’d like to see more creative—and sustainable—online business models that break out

Web 3.0: Show Me the Money

piDespite a sincere enthusiasm for all things Internet, Site can’t help but to have noticed a lot of over-valuation going on.

Site applauds recent news from Silicon Valley that increasingly scrutinizing eyes are being put to Internet-based investments. Most notably, VCs now seem more interested in investing in companies projecting non-ad-based revenue models, citing that Accel’s early investment in Facebook might not be repeated today given the social platform’s challenges with monetization.

Making money online is attractive because it’s extremely efficient and cost-effective if done right—not because it magically happens with when traffic or even market share get large. Potty-mouth notwithstanding, Jeremy Schoemaker makes a nice case for caution when counting your Internet chickens before they are hatched in his 7 Deadly Sins of People Trying to Make Money Online.

Making money online is smart. Making smart money online is even smarter. Cheers to the portfolio managers who see past simple site popularity and look for clean, predictable and short paths to profitability when deciding how to spend investment dollars.

Internet Marketing – Good News, Bad News

yin_jangFirst, the good news. For those who make their living online, an impressive 68% of advertisers plan to increase digital spending over the next 6 months.

Now, the bad news.

Passing the holidays in lovely Tucson, AZ, Site notes that although our beloved desert hideaway of 750,000 citizens has doubled in size in the past 20 years, its town paper, the Arizona Daily Star, has noticeably shrunk. With each passing year, the news recedes and the ad space grows. Site loves the Internet, but still can’t help but morn the waning of a great American tradition–the town paper.

MVT in the NYT

times_truckI love catching clips about the Internet marketing arena in mainstream media. Last week’s Economist had a few encouraging words on the current state and future of online advertising. And this a few days ago from the NYT on Internet marketing — a fascinating description of multivariate testing and optimization without ever mentioning the words multivariate testing or optimization.

Word of Mouth Marketing: Everything Old is New Again

dale_carnegieThumbing through the Site library, we came across some nice pointers given by Andy Sernovitz in his Word of Mouth Marketing of 2006:

  • Reply and respond.
  • Thank people who say nice things about you.
  • Fix problems and make people happy.

Puts to mind advice from a marketing trailblazer of another era, Dale Carnegie. First published in 1936, How to Win Friends and Influence People seems as relevant today as ever. Leafing through our – ahem – 1980 print edition, Mr. Carnegie’s advice is spot on for anyone engaged in word of mouth, buzz marketing or social media marketing today:

  • Become genuinely interested in other people.
  • Give honest, sincere appreciation.
  • Be a good listener. Encourage people to talk about themselves.
  • Talk in terms of the other people’s interest.
  • Make others feel important, and do it sincerely.

Even Breakthrough Brands Compete

race
Boy, if we only had a nickel for every time we asked a startup CEO about his competition and heard: “Really, no one. No one does what we do. We’re a breakthrough category – you know, like Google.”

Okay, we’ll grant you your big vision. Where would we all be without big vision? In the dark ages. In caves. In the name of evolution, someone among us has to think big.

But while you are busy ensuring that your offering truly is breakthrough, your new savvy sales VP will say the first order of business is to find an enemy. If you don’t define your competitive set while you craft your positioning, it’ll get defined for you when your sales team hits the streets. Better to be in front of it.

No matter how game changing your breakthough brand may be, we all still must compete in the marketplace, yes? Even if no one does what you do, with whom must you compete in order to penetrate the over-crowded awareness of your targeted customer? Who else will already be in the consideration set when you ask to be included?

If you aren’t comparing yourself thoroughly to everything remotely close to your offering, your customers are. You should know more than they do, not less. Your savvy sales VP knows that.

The slots for awareness, consideration and decisive action in the minds of the consumer are finite. As are the dollars in our pockets. We are careful about how we spend them. Your visionary value prop may very well follow in the footsteps of the automobile and the telephone, but if you want to ramp up sales quickly, skip the headache of reacting to the marketplace when it asks, “Why you instead of them?” Because it will.

The marketplace will accept you more readily if it is offered a convenient way to fit you in to an existing perceptual set. Be proactive. Anticipate the expectations of your marketplace. Know what your customers need to know about you and make it easy for them to know.

‘Twas the Night Before Twitter Got Montetized

moneySo what do we think, Tweeters – would we like to get a fraction of a penny for each Tweet? According to Ad Age, it can be done in three easy steps.

Site is skeptical. Volume is the name of the game in online advertising – advertisers have to kiss a lot of toads (put forth many, many images) to find a prince (get a click), even when the audience is well targeted.

Although some Tweeters have impressive follower volume, we’ve yet to see numbers that would mean anything to an advertiser, most of whom need to present an ad to several hundred thousand unique visitors a month before they see any real ROI from an advertising investment. Keyword: uniques.

Sure, our Twitter followers are highly targeted, presuming they self organize into networks of shared interests, but their networks are also relatively static. We’ve yet to see any single member of a social network – not My Space, not Facebook – see hundreds of thousands of brand new unique visitors to their page every month.

The result thus far has been that all that fantastic technology that can scan content and determine what product and service categories will interest the followers of one specific Tweeter or the visitors to a single Facebook page, usually identify one or two. This explains why when we log into Facebook and visit our friend’s pages, we see the same stale ads again and again.

Site thinks the content + ad model for monetizing web properties works quite well for many, but not for all and especially not for social networks. Facebook has yet to monetize profitably, let alone find a path to sustainable revenue growth. Famous for giving away the store to Facebook app developers who do see hundreds of thousands of unique visits per month, Site predicts Facebook will soon discover this is the only real revenue stream on the property. Watch for Facebook to start taking a bigger slice of the pie from application ad revenue.

Especially in today’s economy the path to revenue for online ventures needs to be much, much shorter. Investors don’t have five or six years to wait around for Amazon to get profitable anymore. Site is keeping it’s eyes and ears open for social networks that skip the ad model and aim for immediate revenue sources – direct commercial relationships with their users in the form of subscription fees.

Search Engine Marketing ROI: Real-World Examples

imgres-1If you haven’t put a critical eye to your search efforts, a little attention will go a long way. Unoptimized search traffic is often a marketer’s lowest hanging fruit. Here’s an example of the ROI from a recent in-market paid search campaign:

    • Keyword and benefits-driven ad copy was introduced and CTR increased 73%
    • CPC was increased to achieve better ad positioning and drive more qualified traffic
    • Keyword groups were expanded and campaigns more tightly consolidated and overall spend was reduced by 14.9%
    • Unique, keyword-driven landing pages and a tighter, more controlled registration flow were introduced and conversion rose by 54.5%
    • During the 3 month period, paid search cost per conversion decreased by 15.82%

SITE-SIDE ACQUISITION

Same thing goes for optimizing your website with a value-driven messaging framework that corresponds to your search campaign. Impressive results from a recent on-site ad campaign:

    • Dwell time increased by 40%
    • Registrations increased by 108.3%
    • Profile edits increased by 215%
    • Viral activity (invite a friend) increased by 318%